… FIRS to collect revenues for Customs, MDAs
… estimates Nigeria’s tax gap to be around N20trn
By Victor Osagioduwa
Nigeria’s revenue collection from taxes is one of the lowest in the world but the cost of collection is high, according to Taiwo Oyedele, chairman, Presidential Committee on Tax Policy and Fiscal Reforms, saying the Nigeria Customs Service (NCS) and 62 Ministries, Departments and Agencies (MDAs) of the Federal Government should not collect revenue directly.
The tax expert said all of the revenue not captured before would be brought into the tax net. “In fact, our plan is to repeal many of the taxes that currently make doing business difficult without introducing new ones and yet collect more,” he said.
In a Channels TV interview monitored, Oyedele said the MDAs were not set up to collect revenue and as such won’t do it efficiently, noting, “Ironically, our cost of collection is one of the highest. And the reason for that is that we’ve got all manners of agencies. The Federal Government alone, we have 63 MDAs that were given revenue targets last year, no; actually, in the 2023 budget.
“And two things that would come up from that: on one hand, these agencies are being distracted from doing their primary function which is to facilitate the economy. Number two, they were not set up to collect revenue, so, they won’t be able to collect revenue efficiently.
“So, move those revenue collection functions to the FIRS. It has two advantages: the cost of collection and efficiency will improve, these guys will focus on their work, and the economy will benefit as a result.”
Asked for clarity on his comments, Oyedele said, “If you are Customs, focus on trade facilitation, border protection, and if you are NCC (Nigerian Communications Commission), just regulate telecommunications. You are not set up to collect revenue.
“It can be your revenue and someone else can collect it for you. There will be more transparency because you see what is being collected and is accounted for properly. It is also a way of holding ourselves to account as to how we spend the money we collect from the people.”
He however said there will be pushbacks from stakeholders and others benefitting from the process, but the committee’s sole objective is to not take what belongs to anyone but what should come to the government.
For him, the Treasury Single Account (TSA) initiative as a step in the right direction but has not been fully developed, saying the TSA will help his committee’s work but there is more to do to maximise the initiative.
Moreover, he also said the presidential committee would look into excess bank charges, noting that businesses pay as high as 65 to 70 levies and taxes but the committee’s plan is to reduce the number of taxes to about 10.
According to Oyedele, Nigeria’s tax gap is estimated around N20 trillion as many members of the elite evade paying the exact taxes they should remit to the government.
“As of today, we have a significant tax gap estimated in the region of N20 trillion or even more. If you focus more on the few major taxes – Value Added Tax, Corporate Income Tax, Personal Income Tax, a lot of people are not tax compliant, particularly the middle class and the elite. Some of them are in the tax net with one or two fingers, you pay a thousand naira as tax when you should have paid N10 million,” he said.
The tax expert said all of the revenue not captured before would be brought into the tax net. “In fact, our plan is to repeal many of the taxes that currently make doing business difficult without introducing new ones and yet collect more,” he said.
